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EV test drives are supposed to boost adoption—but they can backfire

Katelynn C Hipolito — Tue, 14 Jul 2026 14:38:54 +0000

EV test drives are supposed to boost adoption—but they can backfire Katelynn C Hipolito Tue, 07/14/2026 - 10:38

One of the biggest obstacles to wider adoption of electric vehicles (EV) is completely invisible and unquantifiable. It’s the belief in many consumers’ minds that the range restrictions of EV make it a bad option for them. Doubts about mobility, whether or not they are well-founded, can run neck-and-neck with curiosity in the minds of consumers, keeping them from making the switch from ICE (internal combustion engine) to EV.

Hang Ren, professor in the information systems and operations management. Photo provided

These doubts are beyond the remedial reach of automakers and sustainability-minded policymakers. Within the EV ecosystem, auto dealerships are the ones most directly responsible for allaying buyers’ concerns. Newly published research by Ioannis Bellos and Hang Ren, professors in the information systems and operations management area at Costello College of Business at 91��, focuses on one of the main levers at the dealers’ disposal: extended test drives. Bellos and Ren’s paper in Production and Operations Management was co-authored by Vishal Agrawal of Georgetown University.

Test drives have become a standard addition to the EV dealer’s toolkit. For example, BMW's Extended Test Drive Program lets customers use an EV for several days, and Volvo's Test Drive+ lends cars for up to four days. In some cases, government-sponsored initiatives such as Drive Electric USA (a partnership with the U.S. Department of Energy) have worked at the local level to facilitate test drives intended to educate consumers about EV.

“A car’s advertised range is public, but the range a driver actually gets depends on personal habits and conditions they can only learn through hands-on experience—which is why dealer demonstrations like extended test drives matter,” say Bellos and Ren. In other words, test drives can prevent range-based doubts from overtaking curiosity. Indeed, if consumers are pleasantly surprised by their experience with the EV, they can leave doubt in the dust, as they zoom ahead all the way to an accomplished sale.

But it can also work the opposite way, as the researchers found using a game-theoretic model of plausible buying conditions. Included in the model were buyers with a range of mobility needs. In the hypothetical scenario, consumers’ natural (pre-test drive) inclination was to favor EV if their needs were high, since high-needs drivers spend more on fuel and EV is gas-free. As in real life, however, even these simulated consumers would not purchase an EV if their overall impression was unfavorable.

Ioannis Bellos, professor in the information systems and operations management. Photo provided

“Offering demonstration service does not always mean that you’ll be convincing the customer to switch to EV,” Bellos says. “As a matter of fact, it may do the opposite—if the test drive convinces the customer that the achievable range is not enough to meet their need.”

The reseachers’ model shows that as EV technology begins to mature, becoming cheaper to produce and thus more profitable, the dealer’s incentive is to offer as many extended test drives as possible to boost sales. But once production costs fall below a certain threshold, the profit potential of EV becomes so high that dealers would be wise not to risk turning a percentage of customers away (or toward conventional ICE vehicles) by offering test drives.

In addition to implications for dealer profits, this dynamic has environmental significance. “If we consider two customers—one who takes a test drive and decides EV is not a good fit, and another who is convinced to purchase an EV after a test drive—the net effect on adoption is zero. They cancel each other out,” says Ren. “Yet the net emissions can increase, because that first customer probably drives more—that’s the reason they were interested in EV in the first place.”

Test drives, then, can be net-negative for the planet to the extent that they deter heavy-use drivers from switching to EV by resolving their range-based doubts.

The researchers also found that test drives can negate the impact of tightening CAFE standards from the U.S. Department of Transportation, which set mandated fuel-economy levels for all automakers. One result of CAFE standards is to encourage production of more fuel-efficient EV as opposed to ICE vehicles. CAFE does not apply to dealers, however. As higher fuel-economy standards pressure automakers to raise wholesale prices for ICE vehicles, the expected switch from ICE to EV is inhibited by the unfavorable impression left in some consumers’ minds by the test drive. The researchers found this can flip the policy's intended effect: Without test drives, tougher CAFE standards reliably push EV adoption up, but once dealers offer test drives, a strict-enough standard can actually leave adoption lower than it would otherwise be.

Bellos and Ren conclude that “dealer demonstration is a powerful but double-edged lever that must be deployed strategically.” The environmental and financial benefits of try-before-you-buy are likely tied to the EV market’s growing pains, and may diminish as it matures.

In This Story

Ioannis Bellos

Hang Ren

Topics

A.I. and Innovation - Costello

ESG - Costello

Costello Research Sustainable Operations

Costello Research Business Model Innovation

Costello Research Retail

Machine learning teaches asset traders not to sweat the small stuff

Katelynn C Hipolito — Mon, 15 Jun 2026 14:40:20 +0000

Machine learning teaches asset traders not to sweat the small stuff Katelynn C Hipolito Mon, 06/15/2026 - 10:40

Financial markets are governed by a combination of rational and irrational forces, statistical probabilities, and “animal spirits.” It takes fluency in both to understand the market, let alone to beat it. Yet market actors, including asset traders, now frequently use machine-learning techniques to help generate predictions of future asset prices.

Bo Hu, assistant professor of finance at the Costello College of Business at 91��. Photo provided by Bo Hu.

Scholars such as Bo Hu, assistant professor of finance at the Costello College of Business at 91��, are researching how these machine-learning tools are changing the decision-making processes that move the market, for better or worse.

The subject of Hu’s recent paper in Management Science is a well-known machine-learning technique called LASSO (least absolute shrinkage and selection operator), which has been widely adopted by financial practitioners since its introduction in 1996 by statistician Robert Tibshirani.

“If you look at the original paper, it describes an approach created by adding a regularization penalty to the least-squares regression method,” Hu says. Translation: “The power of LASSO is that it can screen out (i.e., penalize) weak signals while capturing stronger, potentially profitable ones. A LASSO-type trading strategy involves an ‘inactive zone’ for smaller-scale activity, in which the trading strategy is to do nothing.”

The paper was co-authored by Wen Chen of Texas Tech University and Liyan Yang of the University of Toronto.

Despite LASSO’s popularity and power, the soundness of its economic rationale remains unclear. Traders are presumably seeking any edge, however small, in the pursuit of outsized returns. How could it make sense for them to adopt a system designed to relegate signals of lesser magnitude to an ignored “inactive zone”?

To resolve this question, the researchers developed a theoretical framework to model a financial market in which multiple agents (read: traders) use an asset’s price history to forecast its return and make trading decisions.

In the benchmark case, when traders know the trading environment and do not face model uncertainty, they act according to an alternative to LASSO known as MSE (mean squared error). “MSE is essentially a Bayesian learning approach grounded in economic rationality,” Hu says. “It means that rational agents use Bayesian learning to update their beliefs and design their trading strategies. That stands in stark contrast to LASSO estimation, which filters out weak signals.”

However, the researchers found that when traders faced substantial ambiguity about the distribution of asset values, the trading calculus shifted. Ambiguity-averse agents will adopt a robust, LASSO-like strategy, refraining from trading in response to weak or intermediate market signals. With linear constraints imposed on the allowable trading strategies, the equilibrium decisions exactly matched LASSO estimates.

As an equilibrium trading strategy, LASSO can improve aggregate profits relative to the edge-seeking Bayesian alternative in the benchmark case, because the more conservative positions dictated by the “inactive zone” soften competition among traders. In a large market, aggressive competition drives the aggregate profits of traders using the conventional MSE strategy toward zero. By trading less aggressively, LASSO traders may preserve positive aggregate profits—a mechanism the researchers describe as “implicit collusion,” even though the traders do not communicate or explicitly coordinate.

However, Hu underscores that LASSO’s usefulness as a hedge against ambiguity depends on how well traders’ beliefs match the market’s true distribution of risk. The profitability of a LASSO strategy therefore hangs in the balance between traders’ biases and their enhanced market power (due to LASSO’s conservatism).

This balance is especially important when traders must distinguish between temporary fads and persistent trends. “Recently, the semiconductor index had a record-breaking run of consecutive gains. That’s very strong momentum, but if you are a contrarian, you might want to bet against that trend,” Hu says. “A trader must decide whether to follow the trend or take a contrarian position. LASSO’s inactive zone can help prevent overreaction to weak evidence, but it may also delay action when an emerging trend is genuine.”

There is also the possibility that a LASSO strategy could increase market volatility when combined with the other objectives and constraints of market makers, including high-frequency traders. “These traders need to control their inventory,” Hu says. “If they follow a LASSO-type strategy with an inactive zone, they will accommodate the liquidity demands of the market until their inventory reaches a certain threshold. At that point, they may start trading like momentum traders and cause the liquidity dry-up in financial markets. This dynamic is part of what fuels incidents like the ‘flash crash’ in 2010.”

In This Story

Bo Hu

Topics

A.I. and Innovation - Costello

Costello Research Machine Learning

Costello Research Fintech

Finance - Costello

Costello Research Financial Crises

Costello Research Risk Management

Costello College of Business Alumni

Artificial Intelligence

Accounting alum gives back by shaping workforce-ready graduates

Katelynn C Hipolito — Mon, 15 Jun 2026 14:22:14 +0000

Accounting alum gives back by shaping workforce-ready graduates Katelynn C Hipolito Mon, 06/15/2026 - 10:22

Ever since her undergraduate years at the Costello College of Business at 91��—where she lived on campus for all four years—Ann Butler, BS Accounting ’94, MS Accounting ’23, has felt a strong connection to her alma mater.

Ann Butler, BS Accounting ’94, MS Accounting ’23. Photo by Al Sali of The Headshot Guy.

Throughout an accounting career spanning industries from hospitality to civil engineering, Butler had long been interested in teaching. When the opportunity arose, she chose to give back in the way she knew best: by bringing her professional expertise and experience to the classroom at Costello.

After connecting with Long Chen, accounting area chair at Costello, during her time as a student in the MS in Accounting Program, Butler began serving as a teaching assistant for her in Accounting 611 (Advanced Issues in Managerial Accounting). Previously, she taught courses at a local community college in her hometown of Richmond, Virginia.

She was driven to teach by a growing concern, observed while hiring employees, that students were entering the workforce less prepared than in the past. “I’ve always loved hiring new grads with little to no experience, and one of the things that I’ve noticed is that, over the years, it seems like students are less and less workforce-ready,” she says. “I felt like maybe I could make a difference.”

Additionally, she wanted to increase interest and excitement for an accounting profession facing a nationwide shortage of accountants and CPAs.

“Ann stood out in my Accounting 611 class not only for earning the top score, but also for her exceptional enthusiasm, intellectual curiosity, and willingness to help her classmates,” says Chen. “Those qualities are all strong indicators of an excellent instructor. I am delighted that Ann has now joined our accounting adjunct faculty and been teaching multiple courses across the undergraduate and graduate programs.”

“I’ve always loved hiring new grads with little to no experience, and one of the things that I’ve noticed is that, over the years, it seems like students are less and less workforce-ready. I felt like maybe I could make a difference.”

— Ann Butler, BS Accounting ’94, MS Accounting ’23

Having recently graduated from the MS in Accounting Program herself, Butler brought a clear perspective on the student experience. “I was hoping that if I could bring passion to the classroom and make accounting fun, maybe we could get more people to major in it,” she says. She wants her students to understand that accounting offers a wide range of career paths, and that success depends just as much—if not more—on strong interpersonal and leadership skills than technical expertise.

Since 2024, Butler has been teaching three online accounting courses at the Costello College of Business—Accounting 695 Graduate Accounting Internship; Accounting 311 Cost Accounting for Undergraduates; and Accounting 611 Managerial Accounting for Graduates—while continuing her professional career in Richmond.

Now serving as controller for Virginia’s largest hotel company, Butler brings her current role and past experiences with her to the virtual classroom. She appreciates the breadth of expertise among her Costello accounting colleagues, many of whom remain active in fascinating careers outside the classroom. She also values Dean Ajay Vinzé’s strong emphasis on career readiness and now sees that as a real difference-maker at Costello. “I think that is really going to set our program apart because that is what employers are looking for,” she says.

Butler’s education at Costello—both undergraduate and graduate—had a profound impact on her life, bringing her full circle as an educator helping to shape the next generation of Patriot accountants. Students in her classes can move forward with confidence, knowing they are developing the skills needed to succeed in today’s workforce.

In This Story

Ajay Vinzé, PhD

Topics

Costello Adjunct Faculty

Costello Accounting Department

Accounting Adjunct Faculty

Experiential Learning Program

Alumni

Student research advances phishing detection and cybersecurity innovation

Katelynn C Hipolito — Mon, 15 Jun 2026 13:52:13 +0000

Student research advances phishing detection and cybersecurity innovation Katelynn C Hipolito Mon, 06/15/2026 - 09:52

Taylor Le, BS Information Technology ‘26, was participating in the Professional Readiness Experiential Program (PREP) internship at Mobius when he was put in contact with Brian Ngac, the assistant dean for centers and FedWriters, Inc., Corporate Partner Faculty Fellow at the Costello College of Business at 91��, who was helping to fund the program.

(left to right) Tien Nguyen, Taylor Le, Richard Nguyen, and Brian Ngac at the 2026 Commonwealth Cyber Initiative Symposium. Photo provided by Brian Ngac.

During weekly check-ins throughout the internship, Ngac provided Le with a more in-depth understanding of PREP, an experiential learning program he launched at Costello. Le expressed interest in conducting research on phishing detection to which Ngac encouraged him to develop a proposal so he could help secure funding. The PREP internship was sponsored by the Commonwealth Cyber Initiative, which also supported the research conducted by Le and his team.

To conduct formal research on a multi-signal phishing detection and continuous user training platform, Le recruited two Virginia Tech computer science students—Tien Nguyen and Richard Nguyen—whom he met through networking. The industry participant Ngac paired them with was Parsons Corporation, a digitally enabled solutions provider at which he also works. Nathan Dykas, senior computational intelligence officer, and Daniel Boyce, AI (artificial intelligence)/ML (machine learning) engineer, mentored the student team during weekly meetings, providing recommendations and guidance on the direction of their research.

“It was awesome to see all the different professors and other students who are going down the same path as us and to see what they were doing with their research, as well as to get additional feedback that we could use to improve our own research.”

— Taylor Le, BS Information Technology ‘26

In collaboration with Parsons Corporation, the team developed Orion, a platform designed for phishing detection and user training. Orion was developed to address the issue of detecting modern phishing pages by combining machine learning with contextual guidance. It turns detection into an immediate teaching moment by mapping findings for the user, showing which parts of the page triggered concern.

Orion was selected for demonstration at the 2026 Commonwealth Cyber Initiative Symposium in Richmond, Virginia, where the team forged valuable connections and gained insights to further strengthen the platform.

“It was awesome to see all the different professors and other students who are going down the same path as us and to see what they were doing with their research, as well as to get additional feedback that we could use to improve our own research,” says Le. The entire team made the trip for the symposium, where they had a booth playing their demo video and where they conducted a live demo as well.

“Being an information technology major, I always thought that I was kind of looped into only being able to do IT-based jobs,” says Le. “But doing a technical project like this gave me more confidence to strive higher and chase those cyber engineering jobs, which I feel like, without the program, I wouldn’t be in the same spot.”

The team’s successful showcase at the Commonwealth Cyber Initiative Symposium underscores how experiential learning, research, and industry partnerships can come together to prepare students to develop innovative solutions in the fields of AI and cybersecurity. Because of PREP and its invaluable industry connections, Le graduated with greater clarity, confidence, and direction, ready to make his mark in these evolving fields.

In This Story

Brian Ngac

Topics

Professional Readiness Experiential Program

Corporate Partner Faculty Fellow

Costello College of Business Students

Cybersecurity

Students

Commonwealth Cyber Initiative (CCI)

Alumni

Costello MBA students drive real-world impact for nonprofit in Innovation and Design Lab

Katelynn C Hipolito — Thu, 11 Jun 2026 19:25:39 +0000

Costello MBA students drive real-world impact for nonprofit in Innovation and Design Lab Katelynn C Hipolito Thu, 06/11/2026 - 15:25

Launched in the spring 2026 semester, the Innovation and Design Lab for Business and Government (MBA 797) is a new experiential MBA course offered at the Costello College of Business at 91��.

loannis Bellos (back left), Natalie Foley (front right), Jessica Knocklein (back right), Deborah Casello (back, third from right), Tierney Marden (back, second from right), with Innovation and Design Lab students including, Lyne Joseph (back, fourth from right), David Pagan (front, second from left). Photo provided by loannis Bellos.

"The Innovation and Design Lab students approached KEYS 365's challenges with curiosity, compassion, and a genuine commitment to meaningful impact," says Deborah Casello, president of KEYS 365. "This work matters deeply because it will help KEYS 365 continue to empower more communities with free suicide prevention education." KEYS 365 is based in Fairfax, Virginia.

Created by its co-instructors, Ioannis Bellos, director of the MBA and MS in Management programs at Costello, and Natalie Foley, senior advisor at George Mason’s University Business Consulting team and adjunct professor at Costello, the Innovation and Design Lab is a student-led course that was developed in partnership with NobleReach Foundation, a corporate and community partner of Costello.

“My vision for this course was to create an innovation experience that infuses an entrepreneurial, problem-solving mindset—one that is valuable whether students go on to become entrepreneurs, work in industry, serve in government, or lead in mission-driven organizations,” says Bellos. “Innovation is not just about launching new ventures; it is about learning how to engage with stakeholders, navigate ambiguity, test assumptions, and develop practical solutions under real constraints.” Working with a nonprofit, the students had to devise creative solutions with limited resources while meeting the timeline of their client.

“Effective innovation begins with understanding human needs and designing meaningful experiences that solve practical problems in ways that create lasting impact. The course also taught me that in consulting, the problem a client initially presents is not always the problem that ultimately needs to be solved, and that process of discovery is often what leads to the most innovative and user-centered solutions.”

— Lyne Joseph, Costello College of Business MBA student

Continuing the trend of increasing experiential learning curricula across Costello’s academic courses, Bellos and Foley collaborated on their overlapping areas of expertise and interests in design thinking and nonprofit organizations. After developing the course framework, Bellos and Foley connected with NobleReach Foundation, knowing they shared a commitment to experiential learning, mission-driven innovation, and preparing students to tackle meaningful, real-world challenges.

To complement Foley’s background in innovation consulting with Fortune 500 companies and large nonprofits, they were able to tap into NobleReach’s resources for the social impact component. “Over eight weeks, George Mason students worked directly with KEYS 365, a mental health and suicide prevention organization, to tackle two challenges that constrain small nonprofits everywhere: how to build sustainable fundraising without burning out leadership, and how to recruit and screen volunteers for emotionally demanding work,” says Jessica Knocklein, education manager at NobleReach Foundation. “They talked to stakeholders, tested their thinking, and delivered practical solutions. That process is exactly what the next generation of mission-driven leaders need: the ability to bring an entrepreneurial mindset to the hardest problems communities face.”

The course was experiential from day one, led by students rather than instructors. “We didn’t start with a lecture,” says Foley. “The student teams kicked off each class, presenting their field work from the past week, noting ‘this is what we did, this is what we learned, this is how things changed.’ I was really impressed with the level of ownership.” Students did customer interviews every week, pushing them to develop and iterate innovative solutions in a fast-paced, real-world environment.

“The course was not only a great opportunity to apply what we had learned throughout the MBA program, but it also gave us new tools that I think are crucial for every MBA student to know about,” says David Pagan, a Costello MBA student. “Some of the best businesses in the world solve problems with design thinking, and I’m excited to take the lessons I learned here to tackle whatever challenges I take on next.”

A major takeaway for Lyne Joseph, another Costello MBA student, was learning that in people-centered work and business, it does not have to be one or the other. “Effective innovation begins with understanding human needs and designing meaningful experiences that solve practical problems in ways that create lasting impact,” she says. “The course also taught me that in consulting, the problem a client initially presents is not always the problem that ultimately needs to be solved, and that process of discovery is often what leads to the most innovative and user-centered solutions.”

“The Innovation and Design Lab students approached KEYS 365’s challenges with curiosity, compassion, and a genuine commitment to meaningful impact,” says Deborah Casello, president of KEYS 365. “This work matters deeply because it will help KEYS 365 continue to empower more communities with free suicide prevention education.”

By integrating innovation and design thinking frameworks with hands-on experiential learning, the Innovation and Design Lab provides a space for Costello students to take ownership of their work and navigate complex, real-world challenges with confidence. Furthermore, through strategic business partnerships like these, students learn to address the needs of clients, lead with empathy, and deliver solutions that create meaningful impact.

Ioannis Bellos and Natalie Foley have been selected to speak more about the course at the Stearns Center Innovations in Teaching and Learning Conference this September.

In This Story

Ioannis Bellos

Topics

Costello College of Business Students

Corporate and Community Partners Program

Costello MBA program

innovative classes

Students

Is ‘gender gating’ the secret to success in online dating?

Katelynn C Hipolito — Tue, 09 Jun 2026 14:56:48 +0000

Is ‘gender gating’ the secret to success in online dating? Katelynn C Hipolito Tue, 06/09/2026 - 10:56

Digital matching platforms—from professional networking to ridesharing and accommodation services—add value by bringing supply and demand into balance. But deep-seated asymmetries can prove difficult to expunge, causing platforms’ functionality and productivity to suffer. This imbalance is common for many dual-matching platforms, including online dating services where men vastly outnumber women.

Sabari Rajan Karmegam, assistant professor of information systems and operations management.

The matrimonial matching platforms popular among people of Indian descent are a prime example, says Sabari Rajan Karmegam, assistant professor of information systems and operations management at the Costello College of Business at 91��. “The typical men-to-women ratio on these platforms ranges between 60:40 and 90:10,” he specifies.

In a forthcoming paper in Information Systems Research, Karmegam and co-authors Jui Ramaprasad of University of Maryland and Anand Gopal of Nanyang Technological University discuss the results of their experimental study examining engagement practices and outcomes for users seeking lifelong partners through a leading matrimonial platform in India.

As a result of the lopsided gender composition on the platform, men tended to send large numbers of invitations indiscriminately to increase their chances of finding a match. This resulted in a sizable skew in the number of invitations received by women: In Karmegam’s study, women received on average about 40 times as many expressions of interest (EIs) as men did.

The deluge of EIs left women feeling “extremely overwhelmed in the initial couple of days after joining the platform,” Karmegam says. “Once they were flooded with all these requests, it was hard for them to figure out what the platform was all about. Congestion led to reduced engagement by women and potential exit from the platform. Under prevailing social norms in India, families often share in that sorting burden.” The skewed design also left men dissatisfied with the platform due to the competition effect.

To improve the user experience for both parties, Karmegam and his co-authors tested the process of “gender gating,” which made women’s profiles visible only to men who meet culturally acceptable criteria for education, income, and age. For example, the “gender gate” prevented a man in his forties from viewing profiles of women more than 10 years younger or a couple of years older than he was. Women could override the “gender-gated” default settings with their own preferences, but men could not opt out of the restrictions.

The experimental design included two groups (one control and one treatment), each representing a state in India. The two states in the study were similar in size, socioeconomic indicators and located in close geographic proximity, but different in language and cultural characteristics. This minimized interference and helped isolate the effect of the intervention.

The researchers found that without negatively affecting male users, “gender gating” significantly improved women’s platform interaction, increased the number of matches, and improved match quality. It also resulted in women initiating more matches due to reduced screening time for finding a potential match.

Women in the treatment group received 6 percent fewer post-intervention EIs, compared to the control group, while the efficacy of the matches improved by 72 percent. The paper attributes this improvement both to the lower number of EIs received and to better alignment with social norms.

Women over 25, who sit at prime marriageable age and so align in age with more of the marriage-seeking men on the platform, experienced a 103 percent improvement in matching efficacy. They also sent 113 percent more EIs post-intervention, demonstrating increased agency.

In this case, a match is not a marriage but an open line of communication with a serious prospect. “Most of the conversation happens offline,” Karmegam says. “A lot of things need to happen outside the platform for things to work out, and our study does not capture that.”

Still, the “gender gating” experiment was such a success that the platform decided to extend the intervention across the entire user pool, Karmegam reports. In doing so, the platform joined other matchmaking services such as JDate and SKY People that use culturally appropriate criteria as a sorting mechanism to improve matchmaking accuracy.

Karmegam believes similar interventions could be used in non-romantic matchmaking scenarios. “This is something that can be applied to any people-to-people matching. For example, the majority of Uber drivers are men. Parents could ask for their daughter’s Uber teen account to be ‘gender gated’, as an extra layer of protection,” he says.

Hiring in competitive fields such as academia could also benefit from criteria-based sorting. “Narrowing the search to candidates who meet specific criteria, such as schools from which the applicants might have received their PhD degrees, would help raise the effectiveness of the process,” Karmegam says.

In This Story

Sabari Rajan Karmegam

Topics

A.I. and Innovation - Costello

Costello Research Data Analytics

Costello Research Digital Platforms

Costello Research Diversity

Costello Research Business Model Innovation

91�� professor probes ‘Labubu economics’

Katelynn C Hipolito — Tue, 02 Jun 2026 15:03:55 +0000

91�� professor probes ‘Labubu economics’ Katelynn C Hipolito Tue, 06/02/2026 - 11:03

The billion-dollar Labubu phenomenon broke a cardinal rule of retail: Consumers need to know what they’re buying before they open their wallet. Most new Labubu sales took the form of “blind boxes,” where purchasers found out which type of doll they’d purchased only after the fact.

Zhechao Yang, assistant professor of information systems and operations management at Costello College of Business at 91��. Photo by Jeffrey Porovich/Costello College of Business.

Zhechao Yang, assistant professor of information systems and operations management at the Costello College of Business at 91��, says that the “blind box” strategy, or “probabilistic selling” in academic terminology, is a rapidly growing global phenomenon that goes way beyond Labubu. Her recently published paper in Manufacturing & Service Operations Management examines how, and why, this emerging strategy has worked for toymakers, car rental companies and booksellers alike—while delighting customers willing to pay for a surprise.

The paper was co-authored by Hongseok Jang of Tulane University and Xiajun Amy Pan of University of Florida.

The researchers used game-theoretic modeling to analyze the interactions of suppliers, retailers and customers in a market where a manufacturer sells through a retailer. In this realistic setup, a supplier offers an assortment of products ranging from high- to low-quality at wholesale prices, which retailers seek to sell to consumers at the highest possible profit. Either the retailer or the supplier can choose to initiate probabilistic selling (PS), selecting some mixture of high- and low-quality products to go in the “blind boxes.”

Yang and her co-authors noted that PS can improve profits for retailers and suppliers in a number of ways. “One is the market expansion effect,” Yang explains. “If there is an excess of high-quality products that consumers are not buying, they can be combined with low-quality products to form a new product, via PS…Another way is through strategic differentiation, essentially preventing the excess high-quality products from experiencing price convergence with lower-quality products.”

But PS’ profitability potential is far from uniform. As the paper clarifies, it can vary greatly with the context, based particularly on two elements: whether PS is retailer- or supplier-led, and whether high-value products are abundant or scarce.

The researchers found that transaction costs—the extra costs of creating and selling blind boxes—were one of the main determining factors. Whichever party initiates PS will have to bear certain costs, which may include the labor required to assemble “blind boxes,” and additional fulfillment, inventory and logistics costs. Additionally, Yang says, “There could be financial and accounting costs associated with adding new products.”

When retailers take it upon themselves to introduce PS, the associated transaction costs can reshape upstream pricing. Anticipating those costs, the supplier may lower the wholesale price of high-quality products to make the blind-box strategy viable for the retailer. This can help the retailer, but it also reduces the supplier’s margin and may make retailer-led PS unattractive to the supplier under some conditions.

When retailers take the lead, they will adjust the product mix for PS based on balancing transaction costs against the likelihood of product cannibalization—a trade-off that may give rise to more shortsighted choices.

On the other hand, supplier-led PS gives the supplier more control over both the blind-box mix and the wholesale terms. Also, by adjusting the number of high-quality products that will go in the “blind boxes,” the supplier can maximize price differentiation, thus increasing profits.

“When the supplier leads the strategy, it can reduce the channel inefficiency,” Yang says. “In the model, the supplier can control both the product mix inside the blind box and the wholesale terms offered to the retailer. That can make it easier to manage cannibalization and preserve the value of high-quality products.”

The importance of supplier-led PS becomes especially clear when high-value products are scarce. In that setting, the paper shows that firms should use the limited high-value capacity on “blind boxes” rather than sell those products separately.

Thus, the paper concludes that supplier-led PS, unlike the retailer-led variety, can create a “win-win-win” scenario where the supplier and retailer both earn higher profits, market coverage expands, and consumers benefit from access to a broader set of purchasing options.

However, power plays a significant role in real-world decisions around PS. “In reality, major retailers like Amazon may have more bargaining power, more pricing power. The high-level assumption we give this model is that when the retailer is more powerful, the retailer gets the first opportunity to decide whether to introduce PS., but that doesn’t mean it’s the best option for the whole supply chain,” Yang says.

“It’s better for the two parties to have some conversation before deciding who will take the power at the very beginning. Large retailers may have some advantages, but sometimes it’s better to give this power to the supplier.”

In This Story

Zhechao Yang

Topics

Operations - Costello

Costello Research Retail

ISOM Faculty Research

Costello College of Business Alumni

MS in Finance alum built a career foundation through academic engagement

Katelynn C Hipolito — Thu, 14 May 2026 14:07:40 +0000

MS in Finance alum built a career foundation through academic engagement Katelynn C Hipolito Thu, 05/14/2026 - 10:07

During his undergraduate studies, Brian Gaydos, MS Finance ’25, took several finance classes that piqued his interest and led him to consider beginning a finance graduate program immediately after graduating.

Brian Gaydos, MS Finance ’25. Photo by Hannah Patterson/Costello College of Business

After learning about the faculty’s academic research and industry experience, as well as the campus’s location and the program’s convenience, his decision was sealed, and he enrolled in the Master of Science in F inance program at the Costello College of Business at 91��.

“George Mason has a great recruiting base. I think that attending these networking events is something that really helped kickstart my career.”

— Brian Gaydos, MS Finance ’25

In the hybrid program, Gaydos made sure to attend in person almost every time, taking two classes at a time each eight-week semester. He found the faculty exceeded his expectations, especially in the courses taught by Tiago Requeijo, instructional assistant professor of finance, and Derek Horstmeyer, instructional professor of finance.

Gaydos took Statistical and Quantitative Methods for Finance, as well as Managerial Economics and Decisions of the Firm, with Requeijo. In Quantitative Methods, he developed a strong foundation in applying statistical and quantitative techniques to financial data, strengthening his ability to analyze trends and make data-driven decisions using Python. Through Managerial Economics, he gained a deeper understanding of how firms approach pricing, cost structures, and strategic decision-making in competitive markets. Together, these classes played a key role in shaping his ability to approach financial and business problems with both analytical rigor and a strategic perspective.

Gaydos was also particularly impacted by classes and mentorship from Horstmeyer. In the Student Managed Investment Fund course, students actively manage a real investment portfolio, conduct equity research, and present investment recommendations. Through this experience, Gaydos gained hands-on exposure to portfolio construction, valuation, and risk analysis while developing the ability to communicate and defend investment ideas in a professional setting. The course emphasized real-world application, requiring students to collaborate on investment decisions and engage with financial tools and market data. Gaydos also completed research assistant work for Horstmeyer, which was published in The Wall Street Journal.

While enrolled at Costello, Gaydos gained another perspective on the material he was studying and researching as a teaching assistant for two 400-level finance courses. “When you’re on the side where you’re explaining and teaching concepts to other people, it really reinforces your own learning. As you answer questions, it makes you think deeply about the material,” he says.

Among Gaydos’s favorite experiences at Costello was the Costello Fellows on Wall Street trip to New York City, where he visited several firms and networked with local alumni. He took advantage of many other opportunities including joining the Mason Consulting Group and competing in the CFA Research Challenge. In addition to these extracurricular experiences, Gaydos attended networking events, like the Meet the Firms on-campus event, where he made a connection that led to landing a financial analyst role shortly after graduating. “George Mason has a great recruiting base,” he says. “I think that attending these networking events is something that really helped kickstart my career.”

Currently, Gaydos is a financial analyst at Brookfield Residential, a leading North American land developer and homebuilder for more than 65 years. His chief responsibilities revolve around conducting competitive analyses for single-family housing communities across the Northeast, performing variance analyses, and supporting quarterly financial reporting.

“It’s interesting to be able to see inside the business and to plan ahead strategically,” he says. Financial modeling skills that he developed in his corporate finance class, such as forecasting and valuation, have become integral to his role.

By taking advantage of experiential learning opportunities, student organizations, research roles, and networking events, Brian Gaydos forged connections and deepened his understanding of finance, ensuring that his education was not limited to the classroom. He is particularly interested in exploring fields such as investment banking, private equity, and corporate strategy, where he can apply his financial modeling and analytical skills to evaluate investments, drive strategic decisions, and create long-term value. As he continues his professional journey, Gaydos remains confident that the strong foundation he built at Costello will continue to support his career success.

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Tiago Requeijo

Derek Horstmeyer

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Master's in Finance Program

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Students step into the world of investment banking through Costello Fellows on Wall Street

Katelynn C Hipolito — Wed, 13 May 2026 14:52:31 +0000

Students step into the world of investment banking through Costello Fellows on Wall Street Katelynn C Hipolito Wed, 05/13/2026 - 10:52

To learn through experience and gain a competitive edge, finance and accounting students from the Costello College of Business at 91�� participated in the Costello Fellows on Wall Street program, connecting with major financial services firms and alumni in New York City. What has become an annual tradition continues to grow, with participation expanding significantly—from 10 students in previous years to approximately 30 this year.

Costello College of Business alumni networking. Photo by Alina Alam

Using his extensive connections, the trip this past April was organized by Derek Horstmeyer, an instructional professor of finance at the Costello College of Business, who is also the co-founder and director of the Montano Student Managed Investment Fund (SMIF). SMIF is an all-equity fund administered by select finance students at Costello. Those selected as officers are responsible for managing a $492,000 portfolio.

Additionally, Costello offers a SMIF course taught by Horstmeyer, where students learn about the decision-making process involved in managing the fund. Along with other students who seized the funded opportunity to visit Wall Street, many of the participants were members of SMIF.

“A lot of these firms will give you the same experience by flying you out to private recruitment events, but those programs are really competitive, and sometimes they don’t consider you because of your major, year, or some other location factor.”

—Alina Alam, current accounting student at the Costello College of Business at 91��

Costello College of Business alumni reception signage. Photo by Alina Alam.

Alina Alam, a senior studying accounting, first learned about SMIF as a freshman and decided to get involved. She was accepted through the rigorous interview process for her final semester as an undergraduate student. As SMIF’s director of marketing, she documented the trip, capturing photos and moments to share across the organization’s rapidly growing social media platforms.

Over the two-day event, the group moved quickly from firm to firm with a packed itinerary. On the first day, they visited Raymond James, Oppenheimer, and S&P Global, and attended an alumni mixer in the West Village organized by the Costello Alumni Chapter featuring a panel of firm representatives—Manya Vij, BS Finance ‘21; Jannat Bhinder, MS Business Administration and Management ‘18; Megan Farina, BS Management Information Systems '01; and Michael Marino, BA ‘11. The next day consisted of visits to Wolfe Research (an equity research firm), J.P. Morgan, and BMS Capital.

Costello College of Business alumni panel. Photo by Alina Alam.

Many of the students participating in Costello Fellows on Wall Street rank among the top of their class and are applying—or planning to apply—to internships at firms on the trip itinerary. Experiencing the offices firsthand and engaging with professionals across varying levels of seniority provided invaluable insight into the careers they are preparing to pursue.

“A lot of these firms will give you the same experience by flying you out to private recruitment events, but those programs are really competitive, and sometimes they don’t consider you because of your major, year, or some other location factor,” says Alam.

She found tremendous value in the office visits in terms of networking and sharing information with other students. “The students who were on the trip, even the really shy, introverted ones, opened up, and they made friends with the people on the trip,” she says. “If you know people within your major, it gives you an upper hand in so many ways because you know exactly how to get more involved with on-campus organizations like the SMIF once you return from the trip.”

Costello Fellows on Wall Street program student participants. Photo by Alina Alam.

For students interested in working in the highly competitive world of investment banking and equity research, Costello Fellows on Wall Street offers a highly impactful experiential learning opportunity. Throughout the trip, the students learned from finance professionals—many of them alumni—and from each other about the actions they need to take to become stronger job candidates and stand out from the crowd. They are not waiting for firms to come to them—they are blazing a pathway and meeting them where they are.

To get involved with the SMIF, follow them on Instagram @smifgmu or access their official website www.smif.business.gmu.edu to learn more.

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Derek Horstmeyer

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